Ann: Lehman Hedge Settlement Completed , page-2

Well this is one of the two boxes I wanted ticked before I bought in now its a matter of them delivering on more profitable mining



"I crunched alot of numbers on alot of gold companies

NGF was one so

Here's what I saw

Mkt Cap at 17c = $106m
Cash = $70m + $20m in cash backed bonds = $90m
Conv notes = $38m + hedge obligation of $92m (160koz's @ $875/oz vs current $1450 Au price)

EV = $106m Mkt Cap + Net Cash(in this case debt) $40m = $146m


Here's what I like
1. Very large Gold Resource of 6.5Moz's Au at an avg grade of 1.91g/t Au

2. 3Mt - 3.3Mtpa plant operation at Paddington

3. Coal project could be sold to generate good cash



Here's what I dont like
1. Very high cash costs of over $1000/oz last 2 quarters have been $1200/oz ish

2. Gold grade isnt the greatest being sub 2g/t but its only just sub 2g/t so it ok

3. That hedging they have is creating an overhang of $92m or so in a liability



Overall I do like the company but 2 things need to change

1. Before I buy I would need to see a turn around in operations in that Op Ex drops to $800/oz or so

2. Although I will happily buy once I see an improvement in Op Ex I will only buy 1/3rd to 1/2 of what I want until the Hedging liability is resolved


Good luck with it crew"